Accounts receivable outsourcing: the options and what they cost you

The scope varies, so get it in writing. A full service covers:

• Invoicing. Raising and sending invoices from your accounting system, with the right PO number and contact.
• Follow-up. Reminders before and after the due date, and personal emails once an invoice is late.
• Reading replies. Working out whether a customer has paid, needs something, disputes the invoice or has promised a date.
• Cash application. Matching payments received to the invoices they pay.
• Reporting. An aged receivables summary and a list of what needs your attention.

A narrower service covers only follow-up on overdue invoices, which is where most of the time goes. Our page on accounts receivable services describes each task in more detail.

An onshore AR firm. A company in your own country, often run by accountants or former credit controllers, that takes on the work for several clients. You get people who know local practice and work your hours. They are usually the most expensive route per hour, and some set a minimum monthly fee.

An offshore team. A company abroad, commonly in the Philippines or India, that provides staff to work your receivables, either dedicated to you or shared across clients. The hourly cost is the main attraction. In practice you often supply the process, the templates and the training, and someone on your side reviews the work, so it suits businesses that already have a clear process to hand over.

A freelancer or virtual assistant. One person, found directly or through a marketplace, working a few hours a week. Flexible and inexpensive for small volumes. You depend on one person, and there is nobody else when they are away.

An AI agent with a team overseeing it. Software connects to your accounting system and inbox, follows up overdue invoices, reads replies and tracks promises, and people review the cases that need judgement. You pay for the work done rather than for hours, and the history of every email and promise is kept in one place. It covers follow-up and reply handling, not every AR task. Our guide to an AI collections agent explains what it should and should not do alone.

The usual reasons are a lower cost per hour than an onshore hire, a large English-speaking workforce with experience in back-office finance work, and the ability to have work done overnight for a US business.

The trade-offs are practical rather than about the people:

• Management time. Someone on your side still sets priorities, answers questions and checks what went out. Budget for that when comparing prices.
• Process first. An offshore team follows your process well. If you do not have one written down, you will be writing it during the first months.
• Access and data. The team needs logins to your accounting system and a mailbox. Ask how access is controlled, logged and removed when someone leaves.
• Continuity. Ask what happens to your account when a team member moves on, and how their knowledge of your customers is kept.
• Customer conversations. Customers who reply with a dispute or a complaint expect someone who can decide. Agree who that is before it happens.

If an offshore firm's price is too high for your volume, the cheaper options are usually a part-time freelancer for a few hours a week, or software that does the routine follow-up and brings the exceptions to you.

Outsource the routine and keep the decisions.

• Disputes. When a customer says the work was wrong or the amount is off, the person replying needs authority to fix it. See our guide to invoice disputes.
• Payment plans and write-offs. These are commercial decisions about your money.
• Your largest customers. A late payment from a customer who is a large share of revenue is a relationship conversation.
• Escalation. Handing a debt to a third party or taking legal steps should be your call, case by case.

1. Whose name do the emails go out under, and from which address? Your customers should see your business, not a third party.
2. Who approves what is sent? Can you review messages before they go, at least at the start?
3. What access do you need, and how is it removed? Logins to your accounting system and mailbox should be named, limited and revocable.
4. How do I see what happened? You should be able to see every email, reply and promise against each customer without asking.
5. How is it priced? Per hour, per invoice, a monthly fee, or a share of what is collected. Ask what is included and what costs extra.
6. What happens at the end? If you stop, do you keep the history?